American Shingle’s Bankruptcy Highlights Benefits of Mechanics Liens

American Shingles Bankruptcy Highlights Benefits of Mechanics LiensA few months ago we posted about a mega-project in Las Vegas facing financing troubles and leading to over $500,000,000 in mechanic liens.   The point?   Even on the biggest of projects, mechanic liens transform your payment problem with the hiring party, into a problem that affects the entire project.

Well, Atlanta-based roofing company American Shingle just filed for bankruptcy (bankruptcy filing legal docs here), and they are illustrating this same point on a tiny scale.   Instead of a billion dollar mega-project, mechanic liens are affecting residential properties across Georgia and elsewhere.

Folks frequently ask me: what’s the benefit of filing a mechanic lien?

An article I wrote in February 2008 answers this question in detail, but for the purposes of this discussion about American Shingle, here’s an excerpt:

If you’re unable to get paid on a construction project, you have a legal remedy under contract law only against the person who hired you.   A mechanic lien, however, completely changes this paradigm.  With a lien, you can sue the person who hired you, along with the property owner – regardless of how far you are down the contracting chain [depends on state laws].

What this means for the American Shingle situation is highlighted by a news story from the Atlanta NBC Affiliate 11 Alive:  American Shingle Customers Could Pay Twice.

Unlike the 11 Alive story, the Construction Lien Blog focuses on creditor’s rights (versus consumer rights).   If you’re a consumer, you can check out the “Consumer Ed” resource published by the GA Department of Consumer Affairs, which has information on liens.

For creditors, however, the American Shingle situation is a good lesson.   Protect your lien rights by sending required notices and filing your liens within the legal time frames.   You never know when companies may run into financial difficulty and file bankruptcy (American Shingle was a pretty big company).   When something like this happens, your lien rights will be invaluable.

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Scott Wolfe Jr

About Scott Wolfe Jr

Scott Wolfe Jr. is the CEO of zlien, a company that provides software and services to help building material supply and construction companies reduce their credit risk and default receivables through the management of mechanics lien and bond claim compliance. He is also the founding author of The Lien and Credit Journal, a leading online publication about liens, security instruments and getting paid on every account. Scott is a licensed attorney in six states with extensive experience in corporate credit management and collections law, with a specific emphasis on utilizing mechanic liens, UCC filings and other security instruments to protect and manage receivables. You can connect with him via Twitter, LinkedIn and Google+.